Finding a Better Resolution

Despite the best of intentions and efforts, there is always a risk that a dispute will arise between the buyers and sellers in a real estate transaction.  Misunderstandings, differing expectations, along with the substantial emotional and economic elements of such transactions, are among the many factors which lead to these disputes.

The sad truth is that many of these disputes escalate into lawsuits, the costs of which are frequently more than the amount over which the parties are battling.  Of greater personal concern to Realtors is the fact that once the disputes have escalated, they are frequently targeted as defendants by the attorneys of the actual disputants.

The California Association of REALTORS® (CAR) has tried to address this problem in a variety of ways.  One of the avenues created by CAR was to place a mediation provision in the purchase agreement requiring the buyers and sellers to mediate their disputes before filing a lawsuit or demand for arbitration.  To give this provision "teeth," it specifies in simple terms that claimants, whether buyers or sellers, who do not submit their dispute to mediation before filing a lawsuit or demand for arbitration may be precluded from recovering attorney fees.  Once a claimant makes the request for mediation, then the onus is on the other party, whether the seller or buyer, to agree to participate in the mediation, or that party may likewise be precluded from recovering attorney fees.

As a brief digression, it is important to have a clear understanding regarding the mediation process.  Mediation is a non-binding proceeding where the parties to a dispute attempt to resolve their differences with the guidance of a mediator.  Mediators are people trained in the art of dispute resolution.  In addition, mediators should have a meaningful background in the industry which forms the subject matter of the dispute.

Mediation is often confused with arbitration which is an entirely different proceeding.  Unlike mediation which is non-binding, arbitration is a binding proceeding.  In other words, a matter submitted to mediation will only resolve if the parties reach a mutually acceptable agreement.  On the other hand, the resolution of a matter submitted to arbitration will be determined in a binding fashion by the arbitrator, with the parties having virtually no self-determination.

There are substantial benefits to using mediation to resolve disputes.  Along with providing the parties with the ability to have self-determination, mediation tends to be both time and cost efficient.  In addition, through mediation, there is a far better chance that the parties to the dispute will be able to put their differences behind themselves without any residual ill-feelings.  Similarly, as it relates to third parties, such as Realtors, the risk of being drawn into the dispute, and incurring all the related costs and hardship, is substantially diminished.

Aware of the values of mediation, and in furtherance of its effort to support both its membership and the public at large, Southland Association of Realtors (SRAR) has been among the industry leaders in promoting and facilitating the mediation process.  Several years ago, SRAR implemented a program through which it assembled a panel of mediators and assisted in the administration of mediations for buyers and sellers.  The program was very successful in resolving numerous disputes between buyers and sellers, while at the same time insulating Realtors from exposure to unwarranted claims.

Recognizing both the success, as well as the untapped potential of its program, SRAR established the Mediation Action Committee earlier this year to review the program and possible ways to improve it.  The committee was charged with two key missions.  First was the goal of making all facets of the program more effective and efficient.  The second goal was to make the program more familiar, accessible and attractive to its members and the public at large.

To achieve these goals, all the forms and administrative procedures were streamlined and fine-tuned.  In addition, the committee refined its panel to a select group of experienced real estate industry mediators who have agreed to provide their services at reduced fees.  In identifying the panel members, an emphasis was placed on their ability and willingness to provide educational services to assist Realtors and the public at large in understanding the dynamics and benefits of mediation.

All Realtors are encouraged to take advantage of this very valuable program.  It is a program which serves the interests of buyers and sellers in assisting them to find early and cost-efficient resolutions to their disputes.  In addition, by providing their clients with a forum to resolve their disputes at an early stage, the program provides an effective shield for Realtors from the risk of being subjected to unwarranted claims.

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